Last week I was in Oxford for the 44th Farm Management Conference. I was the penultimate speaker on the programme and had to present my paper just before David Hughes, Emeritus Professor of Food Marketing at Imperial College, London.
It’s not easy being billed as a teaser ram to someone like David. He is one of the finest commentators on food retailing, with broad international experience and a deep understanding of his subject.
Obviously, I was pretty nervous about speaking. Luckily my mate, FW 2006 award-winner Heather Gorringe of Wiggly Wigglers, was there to lend moral support. She had already presented the Middleton Memorial Lecture about social media that morning, so her troubles were out of the way by then.
She came up just before I went on stage and whispered in my ear: “You’re looking very red, sweaty and flustered.” We play these little confidence-crushing tricks on one another: She found that one especially hilarious. Cheers, Hev.
I was relieved to get sat down after my presentation to listen to Prof Hughes. Unfortunately, his paper did not make comforting listening. No one can be entirely certain what the impact of the credit crunch will be on food sales, but he presented some interesting theories.
He started by explaining how shopping habits have already started to change. The sales of premium and healthy product lines have fallen by one-third, but value lines have grown by the same amount. These are worrying trends for us. There are not many sectors where UK producers can rightfully claim to have the lowest costs. Many of us have relied upon niches in the market to make sufficient profit.
He suggested that there were three different potential futures for the food economy.
The first was that we are only experiencing a blip. There was a similar inflationary spike in food prices in 1973 driven by a fuel crisis and things settled back down to normal in a matter of months. This, it was suggested, was unlikely to be the case this time.
The second scenario was that there would be a supply response to rising food prices from the industry. As food prices rise, production increases, which brings prices down again. This natural reaction would get things back to normal, he suggested, by 2012.
The third scenario that Prof Hughes outlined was that our industry may need to completely restructure if the credit crunch dramatically changes the market place. This would require greater sustainability, a less centralised food supply and a mix of high-tech and improved traditional practices to reduce environmental impact.
He highlighted that one of the key problems affecting agriculture is its reliance on oil. Uncomfortably for us, the world’s oil reserves are held by some of the most politically unstable nations. Prof Hughes warned that it would only take a political problem in one of these countries to send crude oil prices soaring beyond $200 a barrel. Farmers, as we are all painfully aware, are very vulnerable when there is volatility in fuel markets.
His comments mirrored my own feeling on the matter. Europe needs to embrace and develop green energy as a matter of urgency. There are big opportunities in biogas and anaerobic digestion. As more farmers adopt them, the technology will improve. Our dependence on oil and our reluctance to move on to better things will seem unfathomable to future generations. As Prof Hughes pointed out: “The Stone Age didn’t come to an end because they ran out of stone. They simply found better things to use.”
At the moment we are in danger of being known by historians as the last members of the “Oil Age.” I suggest that with a little courage and experimentation, we could instead be the first generation of a great new civilisation.
More from Matthew online…
- The downturn in the economy has finally hit Moulton Seas End. I have just noticed that we now have “Value” toilet paper in our executive washroom and not just in the canteen loo. Painful times ahead.
- Read Matthew Naylor’s blog